ILO: Poor-quality jobs to persist this year

By Cai U. Ordinario, Business Mirror

Posted at Jan 25 2011 09:37 AM | Updated as of Jan 26 2011 01:48 AM

MANILA, Philippines - Poor quality jobs brought about by the global economic crisis will persist in the Philippines in 2011, the International Labor Office (ILO) reported.

This, despite the government’s announced goal of creating over a million jobs this year.

In its Global Employment Trends 2011 Report, the ILO said that while employment growth in the Philippines was not severely affected by the crisis, compared with other countries in Southeast Asia and the Pacific, the quality of jobs in the country suffered the most, something that ILO expects to persist this year.

The ILO said increasing food prices around the world also represented a growing threat. For nonagricultural sectors, continued sharp increases in food prices could lead to employment losses, if inflation is transmitted into other areas of the economy and an increase the number of working poor in developing economies.

“Employment growth in Thailand and the Philippines has remained relatively stable, though as both countries have large shares of workers in self-employment and unpaid family work, the crisis had a greater effect on the quality of employment rather than the quantity. Notably, however, employment growth in the Philippines slowed considerably in the second quarter 2010, despite the faster economic growth that was achieved in the first quarter of the year,” the ILO report stated.

In the first quarter of 2010, the ILO said employment in the country increased by slightly above 5%, compared with the same period in 2009. In the second quarter, employment only increased by around 2%, compared with the same period of 2009.

In the Philippines, for example, the youth unemployment rate in July 2010 was 17.3%, compared with 6.9% for adults, and youth account for 52.4% of total unemployment

This, despite the 7.9-percent growth in gross domestic product (GDP) in the first semester. In the first quarter, GDP grew by 7.8% while in the second quarter GDP stood at 7.9%.

The ILO said the Philippines is not alone in this situation in Southeast Asia and the Pacific since the region’s unemployment rate in 2011 is forecast to remain almost the same at 4.9%. Economic growth in the region is, however, expected to slow to 5.3% in 2011.

The report said the official global unemployment stood at 205 million in 2010, essentially unchanged from 2009, and 27.6 million more than in 2007—the eve of the global economic crisis. In 2011 the ILO projects a global unemployment rate of 6.1%, equivalent to 203.3 million unemployed.

Worldwide, 78 million young people (aged 15 to 24) were unemployed in 2010, well above the 2007 precrisis level of 73.5 million but down from 80 million in 2009.

The global youth unemployment rate was 12.6% in 2010, 2.6 times the adult unemployment rate. In Southeast Asia and the Pacific it was 1.42%, in South Asia 9.5% and East Asia 8.3%.

The report notes that globally, an estimated 1.53 billion workers were in vulnerable employment in 2009, equivalent to 50.1% of the global work force.

However, all three Asia-Pacific regions recorded percentages higher than this average; 50.8% (413 million people) for East Asia, 61.8% (or 173 million) in Southeast Asia and the Pacific, and 78.5% (508 million) in South Asia, giving this region the highest rate of vulnerable employment in the world.

The report also finds that there were 630 million workers (20.7% of all workers globally) living with their families in what is defined as extreme poverty ($1.25 a day) in 2009.

Globally, this corresponds to an additional 40 million working poor, 1.6 percentage points higher than the pre-crisis trend projected. Of these, 282 million people were in South Asia, 73 million in East Asia, and 63 million in Southeast Asia and the Pacific.

The labor office said the huge inflow of foreign capital into the region, which led to some currencies in the region gaining more than 10% and some stock markets gaining more than 40 percent in 2010, were the key challenges to growth and jobs this year. The ILO said this could create asset bubbles, drive inflation and be subject to sudden reversals.

“There is one common challenge; we need to rethink our standard macroeconomic policy mixes and make quality-job creation and decent work a central target of macroeconomic policies, alongside high growth, low inflation and balanced public budgets. We must not forget that for people the quality of work defines the quality of a society,” ILO Director General Juan Somavia said in a statement.

The labor office said what is needed is for governments like that of the Philippines to make full and productive employment as a goal of all its macroeconomic policies and address job quality issues.

Making employment generation as the focus of all macroeconomic policies will help increase employment growth alongside steady economic growth. This could reverse the trend in 2010, when employment growth was weak despite strong economic growth.

In terms of improving the quality of jobs, the ILO said governments need to sustain the growth in labor productivity to be able to address vulnerable employment in the region, as well as a large share of the working poor. The ILO estimated that growth in labor productivity might have increased by 5% in 2010.

“Strengthening the social protection floor, education and skills development, in addition to ensuring a stronger link between productivity growth and wage growth, are important means through which job quality in the region can be enhanced while, at the same time, supporting more balanced sources of growth that many countries in the region are seeking to foster,” the ILO said.